VATICAN CITY, Jan 21 (Reuters) - A former Vatican prelate on trial for an alleged plot to smuggle 20 million euros into Italy was further charged on Tuesday with laundering millions through the Vatican bank, police said.

Monsignor Nunzio Scarano and two other people served with arrest warrants were suspected of money laundering and making false statements, police said. The others were Father Luigi Noli, a friend of Scarano suspended from his Vatican job last year, and a notary. Fifty-two others were being investigated.

While the charges had been expected, they were another blow to the image of the Vatican, where Pope Francis has vowed to make Church finances meet global standards of transparency. He has not ruled out closing the bank if it cannot be reformed.

Scarano, 61, is under house arrest in his native Salerno, near Naples, and on trial in Rome for conspiring to smuggle some 20 million euros from Switzerland with a financier and a former secret services officer for rich shipbuilder friends in Salerno.

The new charge, which came after a separate, year-long investigation, concerns suspected money laundering through his accounts at the Vatican bank, officially known as the Institute for Works of Religion (IOR). A police statement said millions of euros in "false donations" from offshore companies moved through Scarano's accounts there.

Police did not say exactly how much laundered money had moved through the IOR but said Scarano had about 5 million euros at his disposal in accounts at the Vatican and in Italian banks.

As part of their investigation, police froze two accounts in an Italian bank just outside the Vatican, one for a real estate company he controlled. They also seized two apartments, for a total of about 6.5 million euros in financial and real estate assets.

Last July, the Vatican bank froze more than 2 million euros in about 10 accounts Scarano kept there.

Elena Guarino, the Salerno magistrate who led the investigation, told reporters the Vatican was fully cooperative and gave her much information on Scarano's bank movements.

VETERAN VATICAN FINANCIER

Scarano worked for 22 years at the Vatican's Administration of the Patrimony of the Apostolic See (APSA), which manages the city-state's real estate holdings and financial and stock portfolios and also acts as a purchasing and human resources department.

As a senior accountant at APSA, Scarano had ready access to the Vatican bank, which has been mired in a number of murky scandals over the decades.

APSA is currently being investigated by the same outside accounting firm that is also helping the Vatican bank close accounts that could potentially be used for money laundering.

In Salerno, Scarano lived in a luxury, 17-room apartment decorated with original artwork worth some 6 million euros ($8.1 million), investigators told Reuters after his arrest last June.

He had been under investigation for months over the suspicious movement of some 590,000 euros in 2012 in one cash transaction from the Vatican bank, investigators said last year.

Well-connected in local high society circles, Scarano divided the cash, most of it in 500 euro notes, among more than 50 friends, investigators said.

Each friend gave him a cashier's check drawn on Italian banks. He then took all the checks to a bank in Salerno and paid off a mortgage on his apartment, which investigators said last year he had purchased for about 1.7 million euros.

Scarano denied the money laundering accusations when they were first made last year. He told investigators the money had come from "donations". Police, however, said on Tuesday that much of it came from offshore companies controlled by his friends.